Anand Jain: A bone of contention between the Ambani brothers

He claims he holds no post and draws no salary. Yet he is a bone of contention between the Ambani brothers. Introducing Mr Anand Jain.

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Malini Bhupta

January 17, 2005

ISSUE DATE: January 17, 2005

UPDATED: March 20, 2012 18:46 IST

Anand Jain

He is not an Ambani but is often referred to as the third son of Dhirubhai Ambani, the late founder of Reliance Industries Ltd (RIL).

From being a schoolmate of Mukesh Ambani to a trusted lieutenant of Dhirubhai Ambani in the years when he was fighting the bear cartels led by Manu Manek (1986), Harshad Mehta (1991) and Rajendra Banthia (1995), Anand Jain has traversed a long journey that has earned him a powerful position in the Reliance Group, even though he holds no executive office and draws no salary.

So how is it that Jain has now become a bone of contention between the Ambani brothers? In his January 3 letter resigning as vice chairman of IPCL, RIL Vice-Chairman and Managing Director Anil Ambani implicates Jain as the root cause of differences between him and Mukesh. Two days later, the elder Ambani came out in a veiled defence of his trusted lieutenant.

Interestingly, Jain was the man whom Anil used to keep posted on all contentious issues. All of Anil's emails sent to Mukesh on the issue of management control after the July 27 board meeting last year were marked to Jain and Amitabh Jhunjhunwala, a close aide of Anil who quit as RIL treasurer on December 21.

IN THE SHADOW: Mukesh Ambani (right) with his trusted aide Anand Jain

What Jain enjoys is power without accountability. He has a finger in every pie, be it Reliance Infocomm, acquisitions in the petrochem business, capital market operations, taxation and finance. Jain has no office at Maker Chambers IV, headquarters of RIL, but operates from Maker Chambers III where his company Jai Corp is located.

Jain's association with the Ambanis dates back to the time when he went to Hill Grange School with Mukesh and Anil. Originally from Assam, Jain's family moved to Mumbai in 1963. His family has interests in real estate, galvanised pipes, cold-rolled coils and flexible intermediate bulk containers.

The Bees In Anil's Bonnet

He may not be able to influence the RIL's board agenda, but Anil Ambani is single-handedly dictating the company's media agenda. Here are the four major issues he has raised so far. Expect more in future.Reliance Industries gave a Rs 1,400 crore interest-free loan to four associate companies to purchase shares of Reliance Petroleum before its merger with RIL. After the merger, the associates own 4.7 per cent in RIL but this stake has now been passed onto companies that are not shown as associates of RIL. This has been hotly denied by RIL, claiming that the interest of shareholders remains uppermost and that this issue has been clarified by the company a number of times.

RIL's proposal to buy back shares using up to Rs 3,600 crore belonging to RIL shareholders in the face of pending investigations by SEBI into the company's compliance with listing norms and corporate governance. Anil alleges that the company is undertaking a buyback to bail out individuals who are supporting the company's stock following its falldueto the spat between the brothers. He favoured a bonus issue which the RIL board ignored. The company announced a buyback at Rs 570 per share.

Reliance Industries, which has invested Rs 8,100 crore directly in the group's telecom business through preference shares, has a direct equity stake of only 7.57 per cent in Reliance Infocomm while Mukesh Ambani got 12 per cent stake in Reliance Infocomm as sweat equity for merely Rs 50 crore. Following intense scrutiny by the media, Mukesh renounced this stake in Reliance Infocomm.

The manner and the motive behind a board resolution which granted RIL Chairman Mukesh the power to 'override' Anil's decisions. He describes the manner in which the resolution was passed as "contrary to all norms of corporate governance" and unprecedented in the company's history. His objection was conveyed to Mukesh through an e-mail on July 30, 2004. Having not heard from Mukesh on the issue, Anil reiterated his objection through a formal letter on October 25, weeks before Mukesh publically admitted differences over ownership.

In 1986, Dhirubhai handpicked Jain to counter the bear cartel led by Manu Manek, which was beating down the Reliance stock. Jain was RIL's face on issues of finance, acquisitions and deal structuring. Be it the acquisition of Orissa Synthetics, Raymond Synthetics, India Poly Fibre plant in Uttar Pradesh or DCL's polyester plant in Nagpur, Jain was the RIL representative in all deals.

Gautam Singhania of the Raymond Group, who worked closely with Jain on the Raymond Synthetics deal, calls him a "tough negotiator", while Hrishikesh Mafatlal of Nocil describes him as an "innovative but fair deal-maker".

During Dhirubhai's lifetime, no traces of strain were apparent. Says Congress MP Murli Deora: "I know the three of them (Mukesh, Anil and Anand) since they were boys. All three were very close and made a fine team."

Jain's deal-making expertise has not been limited to RIL's acquisitions. The Ambanis' residence, Sea Wind, was bought by Jain from Gokak Patel and later sold to the Ambanis on Dhirubhai's insistence. More recently, he negotiated on behalf of Reliance to acquire ICI House in Ballard Estate, now headquarters of Reliance Energy.

This is not to say that Jain does not have a reputation that has earned him many foes. A top RIL official says, "Every organisation needs people who can take tough steps at the cost of becoming unpopular and Jain is one of them."

Jain is hated equally within the Mukesh camp. He is known to influence Mukesh even on matters in which he does not have expertise. For example, the marketing plan of Reliance Infocomm initially faced hurdles because marketing managers felt their strategies were blocked by Jain. Whenever the group is in the news for the wrong reasons, Jain steps in as chief media manager.

In fact, prior to Reliance India Mobile's launch, Jain personally undertook all media buying and negotiated with media houses. Reliance veterans claim Anil and Jain weren't on bad terms till about a year ago. In fact, Anil is said to have asked Jain to mediate between the two brothers last year. Perhaps Mukesh's blind faith in Jain and his omnipresence within the group irked Anil.

Intriguingly, Jain neither holds an executive position in the group nor does he directly get compensated for his work. Is he a divine gift to the Reliance empire? The paybacks evidently come indirectly. Some of Jain's companies (Tuf Ropes, Sipta Coated Steel, Polysil and Jai Corp) are distributors of POY and PSF for Reliance and his brother Virendra Jain supplies woven bags to RIL.

Jain's three brothers-in-law too are involved with group business activities in India and abroad. Jai Corp is the largest supplier of bulk containers to RIL. So Jain's sources of compensation from Reliance are as many as his claims to power in the group. Yet, the biggest source of Jain's power in the group has been his anonymity. By dragging him into the spotlight, Anil's camp is diluting that very source of Jain's power.

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